* September payrolls data on Tuesday next market focus
* Fed to buy $3 bln-$4 bln notes due 2019 and 2020
* Overnight repo costs normalizes at around 0.07 pct
By Karen Brettell
NEW YORK, Oct 20 (Reuters) - U.S. Treasuries prices dipped
on Monday before Tuesday's release of employment data for
September, after a more-than two week, partial government
shutdown delayed economic releases and increased concerns that
the closures will weigh on growth.
Lawmakers late on Wednesday increased the U.S. debt ceiling
until February and reopened the government, turning the market
focus back to when the Fed is likely reduce its $85
billion-a-month bond buying program.
The lack of data, however, has muddied insight into economic
strength and has pushed back expectations over when the Fed is
likely to begin to taper to the first quarter of next year. The
payrolls report was originally scheduled for release on Oct. 4.
"The expectations are probably that it has a better chance
of being stronger because it was pre-government shutdown," said
Charles Comiskey, head of Treasuries trading at Bank of Nova
Scotia in New York.
Comiskey sees reaction to the report as likely to be muted
because of the delay in its release. This will give greater
importance will be the payrolls report for October, to be
released on Nov. 8, after being originally scheduled for Nov. 1.
"I think the market is already looking at the report for
October, that will be more important in terms of what the
near-term is, and also Fed policy," Comiskey said.
Benchmark 10-year notes were last down 2/32 in
price to yield 2.60 percent, up from 2.59 percent late on
Friday. The yields rose as high as 3 percent on September 5,
before the Fed surprised investors by keeping the size of its
bond purchase program unchanged.
Among other data the department rescheduled was the consumer
price index for September, which will now be released on Oct.
30, and the producer price index for September, now due on Oct.
Chicago Fed President Charles Evans said on Monday that it
will likely take months to sort out the picture of the Labor
market and that a tapering of bond purchases may begin later
because of the budget battle in Washington.
The Fed will buy between $3 billion and $4 billion in notes
due 2019 and 2020 on Monday as part of its ongoing purchase
The cost of borrowing overnight against Treasuries traded
back at more normal levels, at around 0.07 percent on Monday.
An influx of cash as investors returned to the market had
sent the cost of borrowing against Treasuries into negative
levels, around minus-0.10 percent, late on Friday.
Concerns about taking possession of Treasuries bills that
were at risk of a U.S. default had disrupted the repo market
before Wednesday's agreement to raise the debt ceiling, making
it more expensive to obtain the loans.
- Budget, Tax & Economy